Document/Exhibit Description Pages Size
1: 10-K Annual Report 33± 120K
2: EX-10 Nq Pension Plan 2± 10K
3: EX-10.1 Pension Plan 1 9K
4: EX-10.2 Mid-Career Pension Plan 1 7K
5: EX-10.3 Disability Plan 9± 34K
6: EX-10.4 Exec. Retire Sav. Plan 1 8K
7: EX-12 Ratio 1 6K
8: EX-13 Annual Report 48± 225K
9: EX-21 Subsidiaries 1 6K
10: EX-23 Consent 1 8K
11: EX-24 Power 2± 13K
12: EX-24.1 Resolution 1 8K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1993
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from
Commission File Number 1-9157
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut 06-1157778
(State or other (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
227 Church Street, New Haven, CT 06510
(Address of principal (Zip Code)
executive offices)
203) 771-5200
(Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
Common stock-par value $1 New York and Pacific Stock
per share Exchanges
Rights to purchase common New York and Pacific Stock
stock Exchanges
(Currently traded with
common stock)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x. No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
At February 28, 1994, 64,001,753 common shares were outstanding.
At February 28, 1994, the aggregate market value of the voting stock
held by non-affiliates was $2,022,514,890.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's Annual Report to Stockholders for
the fiscal year ended December 31, 1993 (Part II)
(2) Portions of the registrant's definitive Proxy Statement dated
March 28, 1994 issued in connection with the 1994 Annual Meeting
of Stockholders (Part III)
1
TABLE OF CONTENTS
Item Page
1. Business 3
2. Properties 15
3. Legal Proceedings 16
4. Submission of Matters to a Vote of Security
Holders 16
PART II
5. Market for the Registrant's Common Stock and
Related Shareholder Matters 18
6. Selected Financial Data 18
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 18
8. Financial Statements and Supplementary Data 18
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 18
10. Directors and Executive Officers of the Registrant 18
11. Executive Compensation 18
12. Security Ownership of Certain Beneficial Owners and
Management 18
13. Certain Relationships and Related Transactions 18
14. Exhibits, Financial Statements Schedules, and
Reports on Form 8-K 19
See page 17 for "Executive Officers of the Registrant."
2
PART I
Item 1. Business
GENERAL
Southern New England Telecommunications Corporation (the
"Corporation") was incorporated in 1986 under the laws of the
State of Connecticut and has its principal executive offices
at 227 Church Street, New Haven, Connecticut 06510 (telephone
number (203) 771-5200). The Corporation is a holding company
engaged through its subsidiaries in operations principally in
the State of Connecticut: The Southern New England Telephone
Company (providing for the most part regulated
telecommunications services and directory publishing
services); SNET America, Inc. (providing interstate and
international long distance services to Connecticut
customers); SNET Cellular, Inc., SNET MobileCom, Inc. and SNET
Paging, Inc. (providing personal communications services);
SNET Diversified Group, Inc. (primarily engaged in the leasing
of communications equipment to residential and business
customers; and providing other telecommunications services not
subject to regulation); and SNET Real Estate, Inc. (engaging
in leasing commercial real estate). The Corporation furnishes
financial and strategic planning, and stockholder relation
functions on its own behalf and on behalf of its subsidiaries.
THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY
The Southern New England Telephone Company ("Telephone
Company"), a local exchange carrier ("LEC"), was incorporated
in 1882 under the laws of the State of Connecticut and is
engaged in the provision of telecommunications services in the
State of Connecticut, most of which are subject to rate
regulation. These telecommunications services include (i)
local and intrastate toll services, (ii) exchange access
service, which links customers' premises equipment ("CPE") to
the facilities of other carriers, and (iii) other services
such as digital transmission of data and transmission of radio
and television programs, packet switched data network and
private line services. Through its directory publishing
operations, the Telephone Company publishes and distributes
telephone directories throughout Connecticut and certain
adjacent communities.
In 1993, approximately 75% of the Corporation's consolidated
revenues and sales were derived from the Telephone Company's
rate regulated telecommunication services. The remainder were
derived principally from the Corporation's other subsidiaries,
directory publishing operations, and activities associated
with the provision of facilities and non-access services to
interexchange carriers. About 71% of the operating revenues
from rate regulated services were attributable to intrastate
operations, with the remainder attributable to interstate
access services.
3
State Regulatory Matters
The Telephone Company, in providing telecommunications
services in the State of Connecticut, is subject to regulation
by the Connecticut Department of Public Utility Control
("DPUC"), which has jurisdiction with respect to intrastate
rates and services, and other matters such as the approval of
accounting procedures, the issuance of securities and the
setting of depreciation rates on telephone plant utilized in
intrastate operations. The DPUC has adopted for intrastate
ratemaking purposes accounting and cost allocation rules,
similar to those adopted by the Federal Communications
Commission ("FCC"), for the separation of costs of regulated
from non-regulated activities.
State Regulation
On May 24, 1993, the DPUC issued a final decision on the
capital recovery portion of the November 1992 rate request
submitted by the Telephone Company ("Rate Request"). The
Telephone Company was granted an increase in the composite
intrastate depreciation rate from 5.7% to approximately 7.3%.
This equated to an increase in Telephone Company revenue
requirement of approximately $40 million annually. The new
depreciation rates were implemented effective July 1, 1993.
On July 7, 1993, the DPUC issued a final decision ("Final
Decision-I") in its three-phase review of the current and
future telecommunications requirements of Connecticut and a
final decision ("Final Decision-II") in the remainder of the
Rate Request docket. The Final Decision-I addressed the
issues of (i) competition [see Item 1., "Competition"]; (ii)
infrastructure modernization; (iii) rate design and pricing
principles; and (iv) regulatory and legislative frameworks.
With respect to "rate design and pricing principles," the DPUC
stated that the pricing of all services must be more in line
with the costs of providing these services. Historically, to
provide universal service, basic residential services have
been subsidized by other tariffed services, primarily message
toll and business services. In regard to the regulatory and
legislative framework, the DPUC endorsed the concept of
incentive-based regulation as a potentially more effective and
efficient regulatory system than the present rate of return
regulation.
The Final Decision-II authorized a rate of return on the
Telephone Company's common equity ("ROE") of 11.65% and an
increase in intrastate revenue of $37.5 million effective July
7, 1993. The Telephone Company was authorized previously to
earn a 12.75% ROE. On August 13, 1993, the DPUC granted the
Telephone Company an additional revenue requirement of $1.9
million to the $37.5 million previously awarded based on a
review of certain areas requested by the Telephone Company.
The total increase in intrastate revenue of $39.4 million is
virtually offset by the approximate $40 million increase in
capital recovery. In addition, the Final Decision-II
addressed areas of infrastructure modernization and incentive
regulation. Under infrastructure modernization, the Final
Decision-II supported, but did not mandate, implementation of
an infrastructure modernization program.
On December 3, 1993, the Telephone Company sought approval
from the DPUC to allow the Telephone Company to develop and
provide electronic information services ("EIS"), including
electronic publishing services. Since 1984, dramatic industry
changes in technology, regulation and competition have
eliminated any need for such a restriction. For the last
three years, AT&T
4
and the Regional Bell Operating Companies ("RBOCs")
have been permitted to enter the electronic
publishing and information services markets. For the same
reasons that the U.S. District Court lifted the ban on
information services and electronic publishing services for
AT&T and the RBOCs, the Company believes that the DPUC should
lift the ban on the Telephone Company offering of EIS. A
hearing in this matter is expected in the first half of 1994.
State legislation, signed into law effective July 1, 1993,
authorized the formation of a task force to study
Connecticut's telecommunications infrastructure and policies.
Draft legislation, based on the recommendations the task force
submitted in February 1994, provides a framework to move
forward with a new regulatory model for Connecticut. This
model would move telecommunications toward a fully competitive
marketplace and provide alternative forms of regulation.
Overall, the goals of the draft legislation are to: (i) ensure
high-quality and affordable universal telecommunications
service for Connecticut customers; (ii) promote effective
competition and the development of an advanced infrastructure;
and (iii) enhance the efficiency of government, educational,
and health care facilities through telecommunications.
Intrastate Rates
The Final Decision-II established rates designed to achieve
the increase in intrastate revenue of $39.4 million. The
following major provisions were included in the Final
Decision-II: (i) reductions in intrastate toll rates
including several toll discount plans; (ii) an increase in
basic local exchange rates for residential and business
customers to be phased in over a two-year period; (iii) a
reduction in the pricing ratio gap between business and
residential basic local service over a two-year period: (iv) a
$7.00 per month Lifeline credit for low-income residential
customer; (v) an increase in local calling service areas for
most customers with none being reduced: (vi) an increase in
the local coin telephone rate from $.10 to $.25; (vii) an
increase in the directory assistance charge from $.24 to $.40
and a decrease in the number of "free" directory assistance
calls; and (viii) a late payment charge of 1% monthly
effective January 1, 1994. This rate award was implemented on
July 9, 1993 through a combination of increases for coin
telephone calls, directory assistance calls along with an
approximate 15% interim surcharge on the remaining products
and services with authorized increases including local
exchange. On July 22, 1993, the DPUC issued a supplemental
decision reducing the interim surcharge implemented on July 9,
1993 to approximately 8%. The Telephone Company issued
credits during August of 1993 to customers who were charged at
the higher rate. The 8% surcharge was in effect until October
9, 1993, when the remaining new rates became effective,
including an average increase in residential basic local
exchange rates of $.32 a month and a slight decrease in
average monthly business rates. In addition, residential basic
local exchange rates will increase $.31 a month and business
rates will decrease an average of $.84 a month beginning in
July 1994. At December 31, 1993, the Telephone Company's
intrastate ROE was below the authorized 11.65%.
Federal Regulatory Matters
The Telephone Company is subject to the jurisdiction of the
FCC with respect to interstate rates, services, video dial
tone, access charges and other matters, including the
prescription of a uniform system of accounts and the setting
of depreciation rates on plant utilized in interstate
operations. The FCC also prescribes the principles and
procedures (referred to as "separations procedures") used to
separate investments, revenues, expenses, taxes and reserves
between the interstate and
5
intrastate jurisdictions. In addition, the FCC has adopted
accounting and cost allocation rules for the separation of
costs of regulated from non-regulated telecommunications
services for interstate ratemaking purposes.
ratemaking purposes.
Federal Regulation
On July 1, 1993, the FCC, in connection with its normal
triennial review of depreciation, granted the Telephone
Company new depreciation rates retroactive to January 1, 1993.
The new rates increased depreciation expense by approximately
$11 million in 1993. Under current price cap regulation,
however, any changes in depreciation rates cannot be reflected
in interstate access rates (see "Interstate Rates," below).
On January 19, 1994, the Telephone Company filed suit in the
U.S. District Court in New Haven claiming that the Cable
Communications Policy Act of 1984 ("Cable Act") violates the
Telephone Company's First and Fifth Amendment rights. The
Cable Act limits the in-territory provision of cable
programming by LECs such as the Telephone Company. The Cable
Act currently prohibits LECs from owning more than 5% of any
company that provides cable programming in their local service
area.
Since January 1, 1988, the Telephone Company has utilized an
FCC approved, company specific Cost Allocation Manual ("CAM"),
which apportions costs between regulated and non-regulated
activities, and describes transactions between the Telephone
Company and its affiliates. In addition, the FCC requires
larger LECs, including the Telephone Company, to undergo an
annual independent audit to determine whether the LEC is in
compliance with its approved CAM. The Telephone Company has
received audit reports for 1988 through 1992 indicating it is
in compliance with its CAM, and is currently undergoing an
audit for the year 1993.
Interstate Rates
The Telephone Company elected price cap regulation effective
July 1, 1991. Under price cap regulation, which replaces
traditional rate of return regulation, prices are no longer
tied directly to the costs of providing service, but instead
are capped by a formula that includes adjustments for
inflation, assumed productivity increases, and "exogenous"
factors, such as changes in accounting principles, in FCC cost
separation rules, and taxes. The treatment as exogenous of
various factors affecting a company's costs is subject to FCC
interpretation.
By electing price cap regulation, the Telephone Company is
provided the opportunity to earn a higher interstate rate of
return than that allowed under traditional rate of return
regulation. However, price cap regulation presents additional
risks since it establishes limits by which the Telephone
Company is able to increase rates, even if the Telephone
Company's interstate rate of return falls below the authorized
rate of return. The Telephone Company is allowed to annually
elect a productivity offset factor of 3.3% or 4.3%. Since
price cap regulation was elected in July 1991, the Telephone
Company has selected the 3.3% productivity factor and does not
anticipate changing its election for the next tariff period.
Choosing the 3.3% factor, the Telephone Company is allowed to
earn up to a 12.25% interstate rate of return annually.
Earnings between 12.25% and 16.25% would be shared equally
with customers, and earnings over 16.25% would be returned to
customers. Any amounts returned to customers would be in the
form of prospective rate reductions. In addition, the
Telephone Company's ability to achieve or exceed its
interstate rate of
6
return will depend, in part, on its ability to meet or exceed
the assumed productivity increase. As of December 31, 1993,
the Telephone Company's interstate rate of return was below
the 12.25% threshold.
The Telephone Company filed tariffs under price cap regulation
on April 2, 1993 which took effect on July 2, 1993, subject to
the FCC's further investigation. The Telephone Company will
file its 1994 annual interstate access tariff filing on April
1, 1994 to become effective July 1, 1994. The filing will
adjust interstate access rates for an experienced rate of
inflation, the FCC's productivity target, and exogenous cost
changes, if any. In January 1994, the FCC began its scheduled
inquiry into the price cap plan for LECs, to determine whether
to revise the current plan to improve its performance in
meeting the FCC's objectives. Results of this inquiry are
expected in late 1994 or early 1995.
In an order released on January 9, 1990, which did not
directly apply to the Telephone Company, the FCC established a
precedent whereby a customer has a right to recover damages if
they can establish that a LEC exceeded its authorized rate of
return. The FCC, in a March 1993 order responding to a
complaint filed by Sprint Communications Company ("Sprint")
alleging overearnings in switched traffic sensitive access
charges, affirmed the Telephone Company's right to offset
overearnings in one access category with underearnings in
another category, and held that the Telephone Company had no
liability. Sprint has appealed the order to the U.S. Court of
Appeals.
Regulated Operations
The network access lines provided by the Telephone Company to
customers' premises can be interconnected with the access
lines of other telephone companies in the United States and
with telephone systems in most other countries. The following
table sets forth, for the Telephone Company, the number of
network access lines in service at the end of each year and
the number of intrastate toll and intrastate WATS messages
handled for each year:
1993 1992 1991 1990 1989
Network Access Lines
in Service 1,964 1,937 1,922 1,904 1,875
(in thousands)
Intrastate Toll and
WATS Messages 524 526 516 521 523
(in millions
The Telephone Company has been making, and expects to continue
to make, significant capital expenditures to meet the demand
for regulated telecommunications services and to further
improve such services (see discussion of I-SNET in
"Competition"). The total gross investment in telephone plant
increased from approximately $3.4 billion at December 31, 1988
to approximately $4.0 billion at December 31, 1993, after
giving effect to retirements, but before deducting accumulated
depreciation at either date. Since 1989, cash expended for
capital additions was as follows:
7
Dollars in millions 1993 1992 1991 1990 1989
Cash Expended for
Capital Additions $231.6 $269.1 $296.3 $370.0 $338.8
In 1993, the Telephone Company funded its cash expenditures
for capital additions entirely through cash flows from
operations. In 1994, capital additions are expected to be
approximately $230 million. The Telephone Company expects to
fund substantially all of its 1994 capital additions through
cash flows from operations.
The Telephone Company currently accounts for the economic
effects of regulation in accordance with the provisions of
SFAS No. 71, "Accounting for the Effects of Certain Types of
Regulation." In the event recoverability of operating costs
through rates becomes unlikely or uncertain, whether resulting
from competitive effects or specific regulatory actions, SFAS
No. 71 would no longer apply. The financial impact of an
accounting change, should the Telephone Company no longer
qualify for the provisions of SFAS No. 71, would be material.
Competition
The Telephone Company's regulated operations are subject to
competition from companies, carriers and competitive access
providers which construct and
operate their own communications systems and networks for the
provision of services to others. At present, regulation
continues to provide for a system of subsidies which prevent
the Telephone Company's prices from moving toward the cost of
providing the service. The Telephone Company's ability to
compete depends to some degree on the action of regulators
regarding the pricing of local, toll and network access
services, and on the Telephone Company's continuing ability to
manage its costs effectively.
In the Final Decision-I, the DPUC concluded that currently
authorized intrastate competition has not adversely affected
either service availability or cost, and that a broadened
scope of intrastate competitive participation was prudent and
warranted. Accordingly, the DPUC found that 10XXX calling and
resale competition were in the public interest and should be
allowed beginning July 7, 1993 in accordance with recently
enacted State legislation. Using 10XXX calling, customers can
use any certified carrier for interexchange calling within
Connecticut by dialing 1, 0, and XXX (a three-digit carrier
code). Terms and conditions associated with the provision of
specialized/ancillary services, including monitoring,
reporting and compensation, would no longer apply.
Since the issuance of Final Decision-I, several interexchange
carriers have filed applications with and received approval
from the DPUC to offer 10XXX intrastate long-distance service.
In addition, a number of resellers have filed for initial
certificates of public convenience and necessity. The
Telephone Company anticipates additional applications will be
filed. The introduction of competition to intrastate long-
distance service and the Telephone Company's reduction in
intrastate toll rates will further erode the Telephone
Company's intrastate toll revenues. Pursuant to Final
Decision-I, the Telephone Company filed on October 1, 1993 its
proposed implementation plan for equal access based on
customer preference for dual primary interexchange carrier
capability (ability to choose one carrier for interstate
calling and either the same or a different carrier for
intrastate long distance calling). The Telephone Company's position
8
regarding cost recovery remains that interexchange carriers
should pay for the direct costs of implementing equal access.
Regarding competition for local exchange services, in January
1994, MCI announced plans to construct and operate local
communication networks in large markets throughout the United
States, including parts of Connecticut in which the Telephone
Company operates. These networks would allow MCI to bypass
the Telephone Company's facilities and provide services
directly to customers. Pending DPUC approval, these services
are expected to be available in Connecticut within two to
three years. Also in January 1994, the Telephone Company
announced that it had reached an agreement to lease part of
its existing digital fiber optic ring network in the greater
Hartford metropolitan area to MFS Communications, Inc ("MFS").
This agreement allows MFS to provide services to large
business customers on an intraexchange basis and eliminates
the need for MFS to construct their own facilities. Teleport
Communications Group, another competitive access provider,
recently announced plans to provide local telephone links
for interstate services to businesses and long distance companies
in the Hartford area.
In an order adopted in September 1992, the FCC required
certain LECs, including the Telephone Company, to offer
expanded special access interconnection to all interested
parties, permitting competitors to terminate their own
transmission facilities in LEC central offices. The Telephone
Company filed tariffs which were implemented in June 1993,
subject to investigation, and was granted some additional
pricing flexibility in light of this increased competition.
In August 1993, the FCC adopted rules, which largely mirror
the requirements adopted in September 1992 for special access
interconnection, requiring certain LECs, including the
Telephone Company, to offer expanded interstate switched
access interconnection. The Telephone Company tariffs which
implemented changes associated with switched access
interconnection became effective in February 1994. The
Telephone Company has received applications from competitive
access providers for special access interconnection in
selected central offices of the Telephone Company. The
Telephone Company anticipates additional applications for both
special and switched access interconnection will be filed. A
number of LECs, including the Telephone Company, have appealed
the FCC's orders to offer special and switched access
interconnection. Oral arguments on the appeal of the special
access order were heard in February 1994 with a decision
expected later in 1994. The appeal of the switched access
order has been delayed pending a decision on the special
access appeal.
The Telephone Company, expecting to see continued movement
toward a fully competitive telecommunications marketplace,
both on an interexchange and intraexchange basis, has taken
several steps to effectively position itself. On January 13,
1994, the Telephone Company announced its intention to invest
$4.5 billion over the next 15 years to build a statewide
information superhighway ("I-SNET"). I-SNET will be an
interactive multimedia network capable of delivering voice,
video and a full range of information and interactive
services. The Telephone Company expects I-SNET will reach
approximately 500,000 residences and businesses thru 1997. In
addition, the Telephone Company has reduced its intrastate
toll rates beginning in July 1993 [see Item 1., "Intrastate
Rates"], is committed to reducing its cost structure, remains
focused on providing quality customer service and has
introduced several new services as mentioned below.
9
New Services
On March 31, 1993, the Telephone Company together with Sprint
announced the introduction of 800 CustomLink Service (service
mark). This service allows the Telephone Company to offer
it business customers an 800 service enabling
them to receive calls from anywhere in the United States
as well as international locations.
In 1993, the Telephone Company launched the next generation of
CentraLink products, CentraLink (service mark) 3100. CentraLink
3100 is a central-office based product that allows flexibility
to add additional phone lines, locations and features to adapt
to customers' changing telecommunications requirements.
In 1993, the Corporation established SNET America, Inc. ("SNET
America") under the laws of Connecticut. SNET America offers
a complete range of interstate and international long distance
services to Connecticut customers, including calling card and
800 service, along with volume discount plans such as Distance
Plus (service mark). Distance Plus offers graduated discounts
where the discount increases as the usage increases. SNET America
began offering service in the third quarter of 1993. Under
a proposed marketing arrangement between the Telephone Company
and SNET America filed with the DPUC on January 7, 1994, the
Telephone Company anticipates selling SNET America's
interstate and international products, and SNET America will
sell the Telephone Company's intrastate products. This
arrangement will enable the Corporation to satisfy its
customers complete long distance calling needs with a single
point of contact.
On October 21, 1993, the FCC approved the Telephone Company's
application to construct, operate, own, and maintain
facilities to conduct a technology and marketing trial for use
in providing video dial tone service in West Hartford,
Connecticut. With construction of the fiber optic and coaxial
facilities completed, the trial began in early 1994. The
trial, offered to approximately 500 customers, provides
hundreds of choices of videos. On December 15, 1993, the
Telephone Company filed a request with the FCC for an
expansion of this trial. The proposal seeks to provide this
service to an additional 20,000 customers in other areas of
Connecticut.
On December 22, 1993, the Telephone Company filed with the
DPUC its application to conduct a market trial for Digital
Enhancer, an Integrated Services Digital Network offering.
Digital Enhancer provides customers with integrated voice and
data communications capabilities on a single telephone access
line. Digital Enhancer will be offered from specially
equipped digital central offices and will require customer-
provided terminal equipment to access and use the service.
This service will enable customers to reduce their
telecommunications costs by reducing wiring requirements,
increase productivity through increased data transmission
speed, and improve quality of service through reduced data
error rates.
Directory Publishing
The Telephone Company's directory publishing operation remains
sensitive to the Connecticut economy. The continuing decline
in new business formations and the acceleration of business
failures within the State will further suppress advertising
growth potential in the near term.
10
The Connecticut advertising marketplace continues to undergo
major structural changes and is becoming increasingly more
fragmented and competitive. Directory publishing faces
potential increased competition from non-traditional services
such as desktop publishing, electronic shopping services and
the expansion of cable television. Furthermore, additional
competition may arise from the regional BOCs' ability to now
offer information services. The Telephone Company's directory
publishing operation will continue to strategically widen its
business focus and respond to emerging market opportunities to
position itself effectively against this potential competition
[see discussion of EIS in Item 1., "State Regulation"].
11
PERSONAL COMMUNICATIONS SERVICES
The Corporation provides personal communications services,
which consist of wholesale and retail cellular telephone
communications and paging services, through its subsidiaries
SNET Cellular, Inc. ("Cellular"), SNET MobileCom, Inc.
("MobileCom") and SNET Paging, Inc. ("Paging").
SNET Cellular, Inc.
Cellular was incorporated in 1985 under the laws of the State
of Connecticut. In 1990, Cellular formed the Springwich
Cellular Limited Partnership ("Springwich") with NYNEX Mobile
Communications Company ("NYNEX Mobile"), The Granby Telephone
and Telegraph Company of Massachusetts, Inc., The Woodbury
Telephone Company and a fifth partner (New York SMSA Limited
Partnership, of which NYNEX Mobile is the managing partner).
Springwich is authorized to provide wholesale cellular radio
telecommunications services in the Hartford, New Haven, New
London, and Fairfield, Connecticut New England County
Metropolitan Areas ("NECMAs") and in the Springfield,
Massachusetts NECMA. Springwich also is licensed to provide
cellular wholesale service in three Rural Service Areas
("RSA"), Windham and Litchfield Counties in Connecticut and
Franklin County in Massachusetts. The combined population of
this region is approximately 4 million. Springwich is
currently subject to FCC, DPUC and the Massachusetts
Department of Public Utility jurisdictions.
In January of 1993, Cellular incorporated SNET Springwich,
Inc. ("SSI"), a wholly owned subsidiary of Cellular. Cellular
transferred a 32% general partnership interest in Springwich
to SSI in both 1993 and 1994 and anticipates transferring the
remaining 18.5% partnership interest in Springwich to SSI in
1995.
Springwich has "roamer agreements" with other cellular
carriers which allow customers of Springwich access to
cellular markets throughout the United States and Canada and
allow customers of other carriers to use Springwich's network.
On July 31, 1990, Springwich petitioned the DPUC to initiate a
proceeding to address whether the conditions necessary to
forebear from rate regulation of cellular mobile telephone
service in Connecticut NECMAs were present, as required of the
DPUC under Connecticut legislation enacted in 1985.
Subsequent to the petition, the DPUC initiated a proceeding
(Docket No. 90-08-03) to address this issue. In 1991, the
DPUC issued a decision denying Springwich's petition for
forbearance citing that the record did not indicate that
forbearance would enhance or expedite the evolution of the
cellular marketplace. On December 16, 1992, the DPUC reopened
Docket No. 90-08-03 to reconsider its 1991 decision. The DPUC
closed this docket on December 15, 1993 without a decision.
Pursuant to a recent federal law, state regulation of
cellular activities is pre-empted unless the FCC approves a
petition by the state regulatory agency to continue its
regulatory scheme. Such a filing, if one is to be made, must
be done by August 10, 1994.,
In February 1993, Cellular announced that it had joined with
other major mobile communications companies to form MobiLink
(service mark) Partners. In July 1993, the MobiLink Partners
set common standards for cellular service nationwide under the
new brand name Mobilink (service mark). Mobilink includes a
number of innovations designed to make cellular service easier
to use and accessible to more cellular phone users across much
of the United States and Canada.
12
On October 22, 1993, the FCC issued a report and order
allocating radio spectrum to be licensed for use in providing
personal communications services ("PCS"). These bandwidths of
spectrum could provide new services such as advanced voice
paging, two-way acknowledgment paging, data messaging,
electronic mail and facsimile transmissions. Under the order,
separate bandwidths would be auctioned to potential PCS
providers in each geographic area of the United States. The
FCC is seeking comments on the design of the auction process,
financing alternatives for special interest licenses, and the
classes of licenses and permits that should be included in the
competitive bidding process. The auction of these bandwidths
of spectrum will allow additional competitors to enter the
market place Springwich serves.
In 1992, Bell Atlantic Corporation ("Bell Atlantic") completed
the acquisition of Metro Mobile CTS, Inc., a non-wireline
provider of cellular services that operates in Springwich
markets. Bell Atlantic, which operates under the name Bell
Atlantic Mobile, has substantial capital, technological and
marketing resources. Cellular has made and will continue to
make significant investments in network expansion and
enhancements in order to effectively compete.
SNET MobileCom, Inc.
MobileCom was incorporated in 1985 under the laws of the State
of Connecticut. MobileCom purchases wholesale cellular
communications service from Springwich and resells cellular
communications service to the retail market under the
servicemark LINX in Springwich's serving area.
MobileCom markets its services through its internal sales
force and through agreements with third-party distributors.
MobileCom anticipates continuing competition from local,
regional and national resellers. Over the past few years,
intense competition for new customers has led to increases in
selling and promotional costs. MobileCom anticipates that
this trend will continue into the foreseeable future. In
response to this competition, MobileCom has offered a new
cellular service plan called Linx Omni that provides customers
with a package of cellular services plus a free cellular phone
when the customer signs a 24 month service agreement.
SNET Paging, Inc.
Paging was incorporated in February 1990 under the laws of the
State of Connecticut. Paging launched service on April 1,
1991. Paging provides its customers with tone, numeric and
alphanumeric paging services through its service trademark
Page 2000 (service mark). Customers have a choice of either
selecting local or regional coverage. Paging also serves as a
reseller of SkyTel, a nationwide paging service. Currently
Paging's network is capable of providing services in Connecticut,
most of Massachusetts, southern New Hampshire, Rhode Island,
Metropolitan New York City, and northern New Jersey.
TNI Associates, Inc. ("TNIA"), formerly SNET Paging
Acquisition Corporation, a wholly owned subsidiary of Paging,
also was formed in February 1990 under the laws of the State
of Connecticut. In October 1993, TINA purchased the remaining
50.5% partnership interest in the net assets of TNI Associates
(the "TNI Partnership") from Telecommunications Network, Inc. The
13
TNI Partnership business purchased by TNIA operates a wide
area paging network covering the seaboard area from
Metropolitan New York to southern New Jersey and Philadelphia.
Paging has three primary competitors in the Northeast region
it serves. One is dominant in the Connecticut marketplace and
is perceived as offering competitive pricing and a high
quality network. The second offers multistate and regional
services that focus on large metropolitan markets with less
emphasis on Connecticut. The last is a large national carrier
that offers the lowest price with an apparent strategy of
building market share rapidly.
SNET DIVERSIFIED GROUP, INC.
SNET Diversified Group, Inc. ("Diversified") was incorporated
in 1986 under the laws of the State of Connecticut in order to
identify and develop new, non-regulated business
opportunities. The majority of Diversified's activities are
leasing and selling CPE to residential and small business
customers. Prior to 1988, embedded CPE was leased under
regulation to customers by the Telephone Company. As part of
the 1993 SNET Systems, Inc. ("Systems") reorganization,
Diversified established a new division, Business
Communications, which continues to offer and maintain certain
key products that are complementary to the Telephone Company's
central-office based solutions. SNET Premium Services, which
offers network related activities such as ConnNet (service
mark) and Conference Calling, was transferred from the Telephone
Company to Diversified effective January 1, 1993.
Diversified faces significant competition from numerous
department store, discount store, and business equipment
retailers that carry CPE. Diversified has differentiated its
product line from its competitors by offering a wide array of
quality products coupled with superior customer assistance and
by offering customers leasing options.
SNET REAL ESTATE, INC.
SNET Real Estate, Inc. ("Real Estate") was incorporated in
1983 under the laws of the State of Connecticut. Real Estate
is an owner of commercial property which it leases under
operating leases and is a participant in a partnership that
also leases commercial property. Currently, Real Estate is
managing its existing portfolio and is not actively pursuing
additional real estate investments.
Real Estate faces a risk that real estate markets in which its
properties are located, primarily Connecticut, may further
deteriorate from their current condition. This risk is
minimized by the conservative nature of Real Estate's
portfolio, a majority of which is leased to affiliates.
SNET SYSTEMS, INC.
SNET Systems, Inc. ("Systems") was incorporated in 1986 under
the laws of the State of Connecticut and was subsequently
dissolved in December 1993. Systems marketed a full range of
sophisticated communications systems and services primarily to
large business customers as well as provided consulting,
installation and maintenance services related to
communications systems.
14
On January 15, 1993, the Corporation announced that it would
disband Systems and reassign its functions and employees to
other organizations within the Corporation. This
reorganization of Systems' operations is in line with the
Corporation's strategy to focus on the Telephone Company's
central-office based solutions. As discussed previously, a
new division of Diversified, Business Communications, was
formed as a result of this reorganization and will continue to
offer and maintain certain key products that are complementary
to central-office based solutions.
SNET CREDIT, INC.
SNET Credit, Inc. ("Credit") was incorporated in 1983 under
the laws of the State of Connecticut. Credit provided lease
financing of telecommunications and other equipment for
Systems and third parties under operating, direct-financing
and leveraged leases. In September 1992, the Corporation
announced its intention to withdraw from the finance business
by phasing out the activities of Credit because it no longer
fit into the Corporation's long-term strategic business plan.
During the first and second quarters of 1993, Credit sold
portions of its direct-financing lease portfolio. Certain
existing leveraged leases and direct financing leases have
been retained as investments.
Employee Relations
The Corporation and its subsidiaries employed approximately
9,820 persons at February 28, 1994, of whom approximately 68%
are represented by The Connecticut Union of Telephone Workers,
Inc. ("CUTW"), an unaffiliated union.
In December 1993, the Corporation announced a business
restructuring program designed to reduce costs and will result
in approximately 2,500 employees exiting the business over the
next two to three year period.
Item 2. Properties
The principal properties of the Corporation and its
subsidiaries do not lend themselves to a detailed description
by character and location. The majority of telecommunications
plant, property and equipment of the Corporation and its
subsidiaries is owned by the Telephone Company. Of the
Corporation's investment in telecommunications plant, property
and equipment at December 31, 1993, central office equipment
represented 39%; connecting lines not on customers' premises,
the majority of which are on or under public roads, highways
or streets and the remainder on or under private property,
represented 35%; land and buildings (occupied principally by
central offices) represented 12%; telephone instruments and
related wiring and equipment, including private branch
exchanges, substantially all of which are on the premises of
customers, represented 2%; and other, principally vehicles and
general office equipment, represented 12%.
Substantially all of the central office equipment
installations and administrative offices are located in
Connecticut in buildings owned by the Telephone Company
situated on land which it owns in fee. Many garages, service
centers and some administrative offices are located in rented
quarters.
15
The Corporation has a significant investment in the
properties, facilities and equipment necessary to conduct its
business wherein the overwhelming majority of this investment
relates to telephone operations. Management believes that the
Corporation's facilities and equipment are suitable and adequate
for the business.
As discussed previously, the Telephone Company plans to invest
$4.5 billion over the next 15 years to build I-SNET. The
Telephone Company plans to support this investment primarily
through increased productivity from the new technology
deployed, ongoing cost containment initiatives and customer
demand for the new services offered. The Telephone Company
does not plan to request a rate increase for this investment.
Item 3. Legal Proceedings
The Corporation and certain of its subsidiaries are involved
in various claims and lawsuits that arise in the normal
conduct of their business. In the opinion of management, upon
advice of counsel, these claims will not have a material
adverse effect on the Telephone Company or the Corporation.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders in the
fourth quarter of the fiscal year covered by this report.
16
Executive Officers of the Registrant (1)
(as of January 1, 1994)
Executive
Officer
Name Age(2) Position Since
Daniel J. Miglio 53 Chairman, President and
Chief Executive Officer 1/86
Robert F. Neal 58 Senior Vice President-
Organization Development 1/87
Ronald M. Serrano 38 Senior Vice President-
Corporate Development 1/93
Donald R. Shassian 38 Senior Vice President and
Chief Financial Officer 12/93
Madelyn M. DeMatteo 45 Vice President, General
Counsel and Secretary 5/90
John A. Sadek 60 Vice President and
Comptroller 1/86
(1) Includes executive officers subject to Section 16 of the Securities
Exchange Act of 1934.
(2) As of December 31, 1993.
Mr. Miglio, Mr. Neal, Mr. Sadek and Ms. DeMatteo have held
high level managerial positions with the Corporation or its
subsidiaries for more than the past five years. Mr. Serrano
was a Vice President of Mercer Management Consulting, Inc.,
(formerly Strategic Planning Associates) for more than five
years prior to joining the Corporation. Mr. Shassian was a
partner with Arthur Andersen & Co., independent accountants,
for more than five years prior to joining the Corporation.
17
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The common stock of the Corporation is listed on the New York
and Pacific stock exchanges and the number of holders of
record, computed on the basis of registered accounts, were
approximately 57,177 as of February 28, 1994. Information
with respect to the quarterly high and low sales price for the
Corporation's common stock and quarterly cash dividends
declared is included in the registrant's Annual Report to
Stockholders on page 48 under the caption "Market and Dividend
Data" and is incorporated herein by reference pursuant to
General Instruction G(2).
Items 6 through 8.
Information required under Items 6 through 8 is included in
the registrant's Annual Report to Stockholders for the fiscal
year ended December 31, 1993 on pages 18 through 47 in their
entirety and is incorporated herein by reference pursuant to
General Instruction G(2).
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
No changes in or disagreements with accountants on any
accounting or financial disclosure occurred during the period
covered by this report.
PART III
Items 10 through 13.
Information required under Items 10 through 13 is included in
the registrant's Proxy Statement dated March 28, 1994 on pages
1 (commencing under the caption "Proxy Statement") through 17.
Such information is incorporated herein by reference.
Information regarding executive officers of the registrant
required by Item 401(b) and (e) of Regulation S-K is included
in Part I of this Annual Report on Form 10-K following Item 4.
18
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Page
Reports on Form 8-K
(a) Documents filed as part of the report:
(1) Report on Consolidated Financial Statements *
Report of Audit Committee *
Report of Independent Accountants *
Consolidated Financial Statements:
Consolidated Statement of (Loss) Income - for
the years ended December 31, 1993, 1992 and
and 1991 *
Consolidated Balance Sheet - as of
December 31, 1993 and 1992 *
Consolidated Statement of Changes in
*
Stockholders' Equity - for the years ended
December 31, 1993, 1992, 1991 *
Consolidated Statement of Cash Flows - for
the years ended December 31, 1993, 1992
and 1991 *
Notes to Consolidated Financial Statements *
(2) Consolidated Financial Statement Schedules for the
year ended December 31, 1993
Report of Independent Accountants 24
V - Telecommunications Plant, Property and 25
Equipment
VI - Accumulated Depreciation 29
VIII - Valuation and Qualifying Accounts 30
Schedules other than those listed above have
been omitted because the required information
is contained in the financial statements and
notes thereto, or because such schedules are
not applicable.
* Incorporated herein by reference to the appropriate
portions of the registrant's Annual Report to Stockholders
for the fiscal year ended December 31, 1993 (see Part II).
19
(3) Exhibits:
Exhibits identified in parentheses below, on file with the
SEC, are incorporated herein by reference as exhibits hereto.
Exhibit
Number
3a Amended and Restated Certificate of Incorporation
of the registrant as filed June 14, 1990
(Exhibit) 3-A to Form SE dated 3/15/91, File No.
1-9157).
3b By-Laws of the registrant as amended and restated
through October 10, 1990 (Exhibit 3 to Form 8-K
dated 10/10/90, File No. 1-9157).
4a Rights Agreement dated February 11, 1987 between
Southern New England Telecommunications
Corporation and The State Street Bank and Trust
Company, as Rights Agent (Exhibit 1 to Form SE
dated 2/13/87-1, File No. 1-9157). Amendment No.
1 dated December 13, 1989 (Exhibit 4 to Form SE
dated 12/28/89, File No. 1-9157). Amendment No. 2
dated October 10, 1990 (Exhibit 4 to Form SE dated
10/12/90, File No. 1-9157).
4b No instrument which defines the rights of holders
of long-term debt of the registrant is filed
herewith pursuant to Regulation S-K, Item
601(b)(4)(iii)(A). Pursuant to this regulation,
the registrant hereby agrees to furnish a copy of
any such instrument to the SEC upon request.
10 (iii)(A)1 SNET Short Term Incentive Plan as amended March 1,
1993 (Exhibit 10(iii)(A)1 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10 (iii)(A)2 SNET Long Term Incentive Plan as amended March 1,
1993 (Exhibit 10(iii)(A)2 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10 (iii)(A)3 SNET Financial Counseling Program as amended
January 1987 (Exhibit 10-D to Form SE dated
3/23/87-1, File No. 1-9157).
10 (iii)(A)4 Group Life Insurance Plan and Accidental Death and
Dismemberment Benefits Plan for Outside Directors
of SNET as amended July 1, 1986 (Exhibit 10-E to
Form SE dated 3/23/87-1, File No. 1-9157).
10 (iii)(A)5 SNET Executive Non-Qualified Pension Plan and
Excess Benefit Plan as amended November 1, 1991
(Exhibit 10-A to Form SE dated 3/20/92, File No.
1-9157). Amendments dated December 8, 1993.
20
(3) Exhibits (continued):
Exhibit
Number
10 (iii)(A)6 SNET Management Pension Plan as amended November
1, 1987 (Exhibit 10-C to Form SE dated 3/21/88-1,
File No. 1-9157). Amendments dated September 1,
1988 and January 1, 1989 (Exhibit 10-C to Form SE
dated 3/21/89, File No. 1-9157). Amendments dated
January 1, 1989 through August 6, 1989 (Exhibit
10-B to Form SE dated 3/20/90, File No. 1-9157).
Amendments dated June 5, 1991 through September
25, 1991 (Exhibit 10-B to Form SE dated 3/20/92,
File No. 1-9157). Amendments dated January 1,
1993 (Exhibit 10(iii)(A)6 to 1992 Form 10-K dated
3/23/93, File No. 1-9157). Amendments dated
September 8, 1993 through December 8, 1993.
10 (iii)(A)7 SNET Incentive Award Deferral Plan as amended
March 1, 1993 (Exhibit 10(iii)(A)7 to 1992 Form
10-K dated 3/23/93, File No. 1-9157).
10 (iii)(A)8 SNET Mid-Career Pension Plan as amended November
1, 1991 (Exhibit 10-D to Form SE dated 3/20/92,
File No. 1-9157). Amendments dated December 8, 1993.
10 (iii)(A)9 SNET Deferred Compensation Plan for Non-Employee
Directors as amended January 1, 1993 (Exhibit
10(iii)(A)9 to 1992 Form 10-K dated 3/23/93, File
No. 1-9157).
10 (iii)(A)10 Change-in-Control Agreements (Exhibit 10-F to Form
SE dated 3/15/91, File No. 1-9157).
10 (iii)(A)11 SNET 1986 Stock Option Plan as amended March 1,
1993 (Exhibit 10(iii)(A)11 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10 (iii)(A)12 SNET Retirement and Disability Plan for Non-
Employee Directors as amended April 14, 1993.
10 (iii)(A)13 SNET Non-Employee Director Stock Plan effective
January 1, 1994 (Exhibit 4.4 to Registration No.
33-51055, File No. 1-9157)
10 (iii)A)14 Description of SNET Executive Retirement Savings
Plan.
12 Computation of Ratio of Earnings to Fixed Charges.
13 Pages 18 through 48 of the registrant's Annual
Report to Shareholders for the fiscal year ended
December 31, 1993.
21 Subsidiaries of the Corporation.
23 Consent of Independent Accountants.
21
(3)Exhibits (continued):
Exhibit
Number
24a Powers of Attorney.
24b Board of Directors' Resolution.
99a Annual Report on Form 11-K for the plan year ended
December 31, 1993 for the SNET Management Retirement
Savings Plan will be filed as an amendment prior to
June 30, 1994.
99b Annual Report on Form 11-K for the plan year ended
December 31, 1993 for the SNET Bargaining Unit Retirement
Savings Plan will be filed as an amendment prior to
June 30, 1994.
The Corporation will furnish, without charge, to a stockholder
upon request a copy of the Annual Report to Shareholders and
Proxy Statement, portions of which are incorporated by
reference, and will furnish any other exhibit at cost.
(b) Reports on Form 8-K:
On November 3, 1993, the Corporation and the Telephone Company
filed, separately, reports on Form 8-K, dated November 3,
1993, announcing that effective December 1, 1993, Donald R.
Shassian, will assume the position of Senior Vice President
and Chief Financial Officer of both the Corporation and the
Telephone Company.
On December 8, 1993, the Corporation and the Telephone Company
filed, separately, reports on Form 8-K, dated December 8,
1993, announcing charges against fourth quarter earnings
totaling $4.08 per common share. These charges include a
restructuring charge for workforce and reengineering
reductions, a refinancing charge and a charge for discontinued
operations.
On January 25, 1994, the Corporation and the Telephone
Company filed, separately, reports on Form 8-K, dated January
24, 1994, announcing the Corporation's 1993 financial results.
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
By /s/ J. A. Sadek
J. A. Sadek, Vice President and Comptroller, March 23, 1994
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and
on the date indicated.
PRINCIPAL EXECUTIVE OFFICER:
D. J. Miglio*
Chairman, President, Chief Executive Officer
and Director
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICERS:
D. R. Shassian*
Senior Vice President and
Chief Financial Officer
J. A. Sadek By /s/ J. A. Sadek
Vice President and Comptroller (J. A. Sadek, as
attorney-in-fact
and on his own
behalf)
DIRECTORS:
F. G. Adams*
William F. Andrews*
Richard H. Ayers*
Zoe Baird*
Barry M. Bloom*
F. J. Connor*
William R. Fenoglio* March 23, 1994
Claire L. Gaudiani*
J. R. Greenfield*
N. L. Greenman*
Worth Loomis*
Burton G. Malkiel*
Frank R. O'Keefe, Jr.* *by power of attorney
23
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
Southern New England Telecommunications Corporation:
Our report on the consolidated financial statements of
Southern New England Telecommunications Corporation has been
incorporated by reference in this Form 10-K from the 1993
Annual Report to Stockholders of Southern New England
Telecommunications Corporation on page 29 therein. In
connection with our audits of such financial statements, we
have also audited the related financial statement schedules
for each of the three years in the period ended December 31,
1993 listed in Item 14 (a) (2) of this Form 10-K.
In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all
material respects, the information required to be included
therein.
Hartford, Connecticut COOPERS & LYBRAND
January 24, 1994
24
Schedule V - Sheet 1
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
SCHEDULE V--TELECOMMUNICATIONS PLANT, PROPERTY and EQUIPMENT
(Millions of Dollars)
COL. A COL. B COL. C COL. D COL. E COL. F
Balance at Additions Retirements Other Balance
Year 1993 beginning at cost - Note (b) Changes at end
Classification of period - Note(a) - Note (c) of period
Land $ 28.4 $ .7 $ - $ - $29.1
Buildings 437.9 27.8 9.2 .7 457.2
Central Office
Equipment 1,631.5 116.4 94.2 8.6 1,662.3
Station Apparatus 59.5 8.5 .6 (3.8) 63.6
Large Private
Branch Exchange 9.2 - 8.4 - .8
Pole Lines 135.6 5.5 2.4 .2 138.9
Cable 1,083.6 50.8 13.6 .1 1,120.9
Underground Conduit 212.3 9.5 .7 (.9) 220.2
Public Telephone
Equipment 16.9 4.3 (1.7) - 22.9
Other Communica-
tions Equipment 65.8 7.2 1.9 - 71.1
Furniture and
Office Equipment 300.7 44.5 24.0 (.4) 320.8
Vehicles and Other
Work Equipment 108.0 8.6 9.9 - 106.7
Telecommunications
Plant Property and
Equipment Under
Construction 84.0 2.1 - (6.6) 79.5
Other 2.0 1.4 - 1.0 4.4
TOTAL (d) $4,175.4 $287.3 $163.2 $(1.1) $4,298.4
The notes on Sheet 4 are an integral part of this Schedule.
25
Schedule V - Sheet 2
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
SCHEDULE V--TELECOMMUNICATIONS PLANT, PROPERTY and EQUIPMENT
(Millions of Dollars)
COL. A COL. B COL. C COL. D COL. E COL. F
Balance at Additions Retirements Other Balance
Year 1992 beginning at cost - Note (b) Changes at end
Classification of period - Note(a) - Note (c) of period
Land $ 27.4 $ .8 $ - $ .2 $28.4
Buildings 423.3 21.9 4.9 (2.4) 437.9
Central Office
Equipment 1,578.1 136.4 84.0 1.0 1,631.5
Station Apparatus 74.4 9.8 24.8 .1 59.5
Large Private
Branch Exchange 11.5 - 2.3 - 9.2
Pole Lines 131.3 5.9 1.6 - 135.6
Cable 1,029.8 69.2 15.3 (.1) 1,083.6
Underground Conduit 197.4 15.1 .2 - 212.3
Public Telephone
Equipment 19.3 .5 2.9 - 16.9
Other Communica-
tions Equipment 63.6 5.9 3.6 (.1) 65.8
Furniture and
Office Equipment 281.5 30.7 11.0 (.5) 300.7
Vehicles and Other
Work Equipment 99.6 15.5 6.8 (.3) 108.0
Telecommunications
Plant Property and
Equipment Under
Construction 92.7 (7.9) - (.8) 84.0
Other 1.0 1.0 - - 2.0
TOTAL (d) $4,030.9 $304.8 $157.4 $(2.9) $4,175.4
The notes on Sheet 4 are an integral part of this Schedule.
26
Schedule V - Sheet 3
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
SCHEDULE V--TELECOMMUNICATIONS PLANT, PROPERTY and EQUIPMENT
(Millions of Dollars)
COL. A COL. B COL. C COL. D COL. E COL. F
Balance at Additions Retirements Other Balance
Year 1991 beginning at cost - Note (b) Changes at end
Classification of period - Note(a) - Note (c) of period
Land $ 27.3 $ .1 $ - $ - $27.4
Buildings 396.9 27.8 1.4 - 423.3
Central Office
Equipment 1,545.2 135.6 91.2 (11.5) 1,578.1
Station Apparatus 80.0 4.2 9.8 - 74.4
Large Private
Branch Exchange 13.0 - 1.5 - 11.5
Pole Lines 124.6 7.7 1.0 - 131.3
Cable 979.3 65.6 15.1 - 1,029.8
Underground Conduit 188.1 9.5 .2 - 197.4
Public Telephone
Equipment 18.4 1.0 .1 - 19.3
Other Communica-
tions Equipment 59.5 6.3 2.2 - 63.6
Furniture and
Office Equipment 256.9 35.1 24.6 14.1 281.5
Vehicles and Other
Work Equipment 92.3 14.8 4.9 (2.6) 99.6
Telecommunications
Plant Property and
Equipment Under
Construction 82.9 9.8 - - 92.7
Other .1 .9 - - 1.0
TOTAL (d) $3,864.5 $318.4 $152.0 $ - $4,030.9
The notes on Sheet 4 are an integral part of this Schedule.
27
Schedule V - Sheet 4
Notes to Schedule V
(a) For regulated telephone plant, additions shown include
(1) the original cost of reused material, which is
concurrently credited to Material and Supplies, and (2)
an Allowance for Funds Used During Construction.
(b) Items of telecommunications plant, property and equipment
when retired, sold or reclassified are deducted from the
property accounts at original cost.
(c) Represents current year transfers between
classifications, and other minor adjustments.
(d) For interstate telephone plant, the FCC has approved the
equal life group ("ELG") depreciation method using a
remaining-life formula on a phased-in basis beginning in
1982. Vintages of interstate plant in service prior to
the phase-in of ELG are being depreciated using a
composite vintage group method. In addition, the FCC
approved the use of straight-line amortization effective
January 1, 1987 to recover an interstate reserve
deficiency over a five-year period ended December 31,
1993. For intrastate plant, the DPUC approved ELG for
1993 vintages and subsequent periods. Vintages of
intrastate plant in service prior to 1993 are being
depreciated using a composite vintage group method. For
the years 1993, 1992 and 1991, depreciation expense on
telecommunications plant expressed as a percentage of
average depreciable plant was 7.0%, 6.2% and 6.6%,
respectively. Property and equipment other than
regulated telephone plant is depreciated primarily using
the straight-line method over the estimated useful lives
of the assets. Assets acquired under capital leases are
generally amortized over the life of the lease using the
straight-line method.
28
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
SCHEDULE VI--ACCUMULATED DEPRECIATION
(Millions of Dollars)
COL. A COL. B COL. C COL. D COL. E COL. F
Balance at Additions Retirements Other Balance
beginning charged - Note (a) Changes at end
Description of period to expense of period
Year 1993 $1,408.0 $286.8 $162.4 $(4.2) $1,528.2
Year 1992 1,318.7 247.6 157.1 (1.2) 1,408.0
Year 1991 1,221.5 251.5 154.7 .4 1,318.7
(a) Includes net salvage.
(b) Columns B and F include accumulated depreciation on the
Corporation's nonregulated telecommunications plant,
property and equipment, which is shown net of such
accumulated depreciation in Note 13 to the consolidated
financial statements.
29
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
(Millions of Dollars)
COL. A COL. B COL. C COL. D COL. E COL. F
Additions
Balance at Additions Charged Balance
beginning charged to to other Deductions at end
Description of period expense accounts - Note B of
-Note (a) period
Allowance for Uncollectible
Accounts Receivable:
Year 1993 $21.8 $ 28.9 $3.6 $27.6 $ 26.7
Year 1992 16.3 33.3 3.9 31.7 21.8
Year 1991 10.3 31.7 3.6 29.3 16.3
Allowance for Uncollectible
Direct-Financing Lease Notes Receivable of Discontinued
Operations:
Year 1993 $ 8.2 $ 15.6 $ - $12.1 $ 11.7
Year 1992 4.6 9.2 - 5.6 8.2
Year 1991 2.7 4.8 - 2.9 4.6
Restructuring Charge:
Year 1993 $ - $355.0 $ - $ - $355.0
(a) Includes amounts previously written off that were
credited directly to this account when
recovered and miscellaneous debits and credits.
(b) Includes amounts written off as uncollectible.
30
Exhibit Index
Exhibits identified in parentheses below, on file with the
SEC, are incorporated herein by reference as exhibits hereto.
Exhibit
Number
3a Amended and Restated Certificate of Incorporation
of the registrant as filed June 14, 1990
(Exhibit) 3-A to Form SE dated 3/15/91, File No.
1-9157).
3b By-Laws of the registrant as amended and restated
through October 10, 1990 (Exhibit 3 to Form 8-K
dated 10/10/90, File No. 1-9157).
4a Rights Agreement dated February 11, 1987 between
Southern New England Telecommunications
Corporation and The State Street Bank and Trust
Company, as Rights Agent (Exhibit 1 to Form SE
dated 2/13/87-1, File No. 1-9157). Amendment No.
1 dated December 13, 1989 (Exhibit 4 to Form SE
dated 12/28/89, File No. 1-9157). Amendment No. 2
dated October 10, 1990 (Exhibit 4 to Form SE dated
10/12/90, File No. 1-9157).
4b No instrument which defines the rights of holders
of long-term debt of the registrant is filed
herewith pursuant to Regulation S-K, Item
601(b)(4)(iii)(A). Pursuant to this regulation,
the registrant hereby agrees to furnish a copy of
any such instrument to the SEC upon request.
10 (iii)(A)1 SNET Short Term Incentive Plan as amended March 1,
1993 (Exhibit 10(iii)(A)1 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10 (iii)(A)2 SNET Long Term Incentive Plan as amended March 1,
1993 (Exhibit 10(iii)(A)2 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10 (iii)(A)3 SNET Financial Counseling Program as amended
January 1987 (Exhibit 10-D to Form SE dated
3/23/87-1, File No. 1-9157).
10 (iii)(A)4 Group Life Insurance Plan and Accidental Death and
Dismemberment Benefits Plan for Outside Directors
of SNET as amended July 1, 1986 (Exhibit 10-E to
Form SE dated 3/23/87-1, File No. 1-9157).
10 (iii)(A)5 SNET Executive Non-Qualified Pension Plan and
Excess Benefit Plan as amended November 1, 1991
(Exhibit 10-A to Form SE dated 3/20/92, File No.
1-9157). Amendments dated December 8, 1993.
10 (iii)(A)6 SNET Management Pension Plan as amended November
1, 1987 (Exhibit 10-C to Form SE dated 3/21/88-1,
File No. 1-9157). Amendments dated September 1,
1988 and January 1, 1989 (Exhibit 10-C to Form SE
dated 3/21/89, File No. 1-9157). Amendments dated
January 1, 1989 through August 6, 1989 (Exhibit
10-B to Form SE dated 3/20/90, File No. 1-9157).
Amendments dated June 5, 1991 through September
25, 1991 (Exhibit 10-B to Form SE dated 3/20/92,
File No. 1-9157). Amendments dated January 1,
1993 (Exhibit 10(iii)(A)6 to 1992 Form 10-K dated
3/23/93, File No. 1-9157). Amendments dated
September 8, 1993 through December 8, 1993.
10 (iii)(A)7 SNET Incentive Award Deferral Plan as amended
March 1, 1993 (Exhibit 10(iii)(A)7 to 1992 Form
10-K dated 3/23/93, File No. 1-9157).
10 (iii)(A)8 SNET Mid-Career Pension Plan as amended November
1, 1991 (Exhibit 10-D to Form SE dated 3/20/92,
File No. 1-9157). Amendments dated December 8, 1993.
10 (iii)(A)9 SNET Deferred Compensation Plan for Non-Employee
Directors as amended January 1, 1993 (Exhibit
10(iii)(A)9 to 1992 Form 10-K dated 3/23/93, File
No. 1-9157).
10 (iii)(A)10 Change-in-Control Agreements (Exhibit 10-F to Form
SE dated 3/15/91, File No. 1-9157).
10 (iii)(A)11 SNET 1986 Stock Option Plan as amended March 1,
1993 (Exhibit 10(iii)(A)11 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10 (iii)(A)12 SNET Retirement and Disability Plan for Non-
Employee Directors as amended April 14, 1993.
10 (iii)(A)13 SNET Non-Employee Director Stock Plan effective
January 1, 1994 (Exhibit 4.4 to Registration No.
33-51055, File No. 1-9157)
10 (iii)A)14 Description of SNET Executive Retirement Savings
Plan.
12 Computation of Ratio of Earnings to Fixed Charges.
13 Pages 18 through 48 of the registrant's Annual
Report to Shareholders for the fiscal year ended
December 31, 1993.
21 Subsidiaries of the Corporation.
23 Consent of Independent Accountants.
24a Powers of Attorney.
24b Board of Directors' Resolution.
99a Annual Report on Form 11-K for the plan year ended
December 31, 1993 for the SNET Management Retirement
Savings Plan will be filed as an amendment prior to
June 30, 1994.
99b Annual Report on Form 11-K for the plan year ended
December 31, 1993 for the SNET Bargaining Unit Retirement
Savings Plan will be filed as an amendment prior to
June 30, 1994.
Dates Referenced Herein and Documents Incorporated by Reference
| This ‘10-K’ Filing | | Date | | Other Filings |
|---|
| |  |
| | 8/10/94 |
| | 7/1/94 |
| | 6/30/94 | | 10-Q |
| | 4/1/94 |
| | 3/28/94 |
| Filed on: | | 3/23/94 |
| | 2/28/94 |
| | 1/25/94 | | 8-K |
| | 1/24/94 | | 8-K |
| | 1/19/94 |
| | 1/13/94 |
| | 1/7/94 |
| | 1/1/94 |
| For Period End: | | 12/31/93 | | 10-K/A |
| | 12/22/93 |
| | 12/15/93 |
| | 12/8/93 |
| | 12/3/93 |
| | 12/1/93 |
| | 11/3/93 |
| | 10/22/93 |
| | 10/21/93 |
| | 10/9/93 |
| | 10/1/93 |
| | 9/8/93 |
| | 8/13/93 |
| | 7/22/93 |
| | 7/9/93 |
| | 7/7/93 |
| | 7/2/93 |
| | 7/1/93 |
| | 5/24/93 |
| | 4/14/93 |
| | 4/2/93 |
| | 3/31/93 |
| | 3/1/93 |
| | 1/15/93 |
| | 1/1/93 |
| | 12/31/92 |
| | 12/16/92 |
| List all Filings |
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